The European Union’s markets watchdog believes that the bloc’s cryptocurrency regulatory framework, the Markets in Crypto-Assets Regulation (MiCA), needs to be modified.
On Oct. 16, the European Securities and Markets Authority (ESMA) released an official opinion on MiCA, encouraging the European Commission to move forward with its proposal to update several aspects of the framework.
“ESMA acknowledges the legal limitations raised by the Commission but emphasizes the importance of the policy objectives behind the initial proposal,” the regulator wrote.
In the opinion, the ESMA specifically considered the amendments proposed to the two regulatory technical standards (RTS) related to data disclosures on intention to provide crypto assets services and the application for authorization as a crypto asset service provider.
What MiCA amendments is the ESMA seeking?
The ESMA recommended that the commission consider amending MiCA to require applicants for crypto asset service providers (CASPs) to provide the results of an external cybersecurity audit.
The regulator elaborated that required information should include an “assessment of the good repute of the members of the management body.”
The regulator also seeks information on CASPs, including checks regarding the absence of penalties in areas other than commercial law, insolvency law, financial services law, Anti-Money Laundering and Counter-Terrorist Financing, fraud or professional liability.
The ESMA emphasized that the objective of these regulatory technical standards is to ensure a “thorough entry point assessment” for applicant CASPs and financial entities intending to offer crypto asset services in the EU. The authority added:
“This will increase the resilience of the crypto assets market and enhance investor protection in the crypto-assets space.”
European Council may adopt or reject ESMA’s amendments
According to the ESMA’s statement, the authority has communicated its opinion to the commission, as well as to the European Parliament and the European Council.
The regulator noted that the council may adopt the two RTS with the amendments it considers relevant or reject it. The authority added:
“The European Parliament and the Council may object to an RTS adopted by the EC within a period of three months.”
The ESMA’s recommendation to adopt MiCA data disclosure amendments comes as Europe prepares for the final MiCA deadline, expected to take effect on Dec. 30.
Related: EU’s MiCA bill set to shape global stablecoin regulations — Binance
Some major cryptocurrency companies, including stablecoin issuer Tether, have previously warned that some MiCA aspects pose certain issues by potentially introducing new risks to the local banking infrastructure and stablecoin operators.
A spokesperson for the ESMA also told Cointelegraph that the regulator was aware of issues raised by market participants regarding MiCA’s titles III and IV. The authority said it continues to actively discuss with its members and other relevant parties how to best address those issues.
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